I’m a staff writer covering all things Wall Street and Investing. I have a love hate relationship with the world of finance. I am fascinated by the industry’s power and influence around the globe, and the ingenuity of the people it employs. Not so much a fan of the lack of accountability when the system fails—which it often does: I'm always on the hunt for people and companies to profile.

As Bank Of America Tries To Recover, Mozilo Says Countrywide Was Never The Problem

The man at the top of the mortgage company that nearly crippled Bank of America says he has no regrets.

Former Countrywide CEO, Angelo Mozilo,"This company was my sixth child."

Angelo Mozilo, the former Countrywide CEO who sold the company to BofA just as the housing bubble burst, says the mortgage originator was a “world-class company” that did not cause the country’s foreclosure problem.

His comments come from a 2011 deposition (full deposition below) that was released last week. In it the plaintiffs lawyer asks Mozilo, who paid $67 million to settle with the SEC back in 2010, if he has any regrets about the way he ran Countrywide in light of “all the foreclosures and ruined lives and lawsuits.

Mozilo’s response may, or may not, surprise you. He says none of those things were the result of any lending Contrywide did but rather the problem was that home values deteriorated and homeowners gave up and walked out. Mozilo on homeowners:

These people didn’t lose their jobs. They didn’t lose their health. They didn’t lose their marriage. Those are the three factors that cause foreclosure. They left their home because the values went below the mortgage. That’s what caused the problem.

The sentiment is interesting considering the SEC’s earlier allegations that say Mozilo publicly reassured investors about the quality of Countrywide loans but meanwhile issued warnings and sold $140 million of his own shares prior to the collapse. Then again, Mozilo has wiped his hands clean of the Countrywide mess.

The man in charge of cleaning it up is Brian Moynihan whose BofA made the terrible mistake (under former CEO Ken Lewis) of purchasing Countrywide back in 2008 for $4 billion.

Mozilo is sitting pretty avoiding much of the Countrywide infection that has plagued Bank of America ever since the acquisition while Moynihan and BofA continue to fight its never-ending battles. That’s why Mozilo’s comments last summer–at a time when BofA shares were off by more than 60% since the financial crisis–burn even more.

In continued defense of his leadership at the Countrywide he tells the lawyer in the deposition that the firm “made no made no loans in Greece. We made no loans in Ireland. We made no loans in Portugal.” Last time we checked, BofA’s Eurozone exposure was the least of its problems.

The awkwardness of Mozilo’s testimony is this: The ongoing MBIA case names Countrywide as the defendant but it’s the parent company, BofA, that will ultimately bear the brunt of the case. So while Mozilo defends the way he raised his “sixth child” (that’s how he describes Countrywide) Moynihan is left holding the tab.

It hasn’t been an easy time for the lawyer turned CEO. Moynihan’s ability to turn the bank around was questioned intensely since his appointment to the top but he’s come a long way. As Bloomberg points out, BofA is the best performer in the Dow Jones Industrial Average for 2012, doubling since the start of the year.

Much of that is thanks to Moynihan’s strategy of raising capital through a vast number of divestments thus restoring investor confidence in the nation’s second largest bank. Consider that not long ago BofA had the worst capital levels among its big bank peers but in the most recent quarter the bank reported a Basel III Tier 1 capital ratio of 8.97%–beating JPMorgan Chase, Wells Fargo and Citigroup.

The bank was one of the first to announce massive job cuts as a means to save on expenses.

Moynihan has come a long way and while he still has a way to go before the ghost of Countrywide can be defeated once and for all there’s little doubt that BofA is on the right track for now. Sixth child be damned.

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I know that no one is going to want to hear this, BUT Mozillo really isn’t that far from saying the truth. And I’m NO fan of either Mozillo or Countrywide.

It really wasn’t his/Countrywide’s mortgages that caused the mess. Rather it was the bundling of those mortgages by hedge funds and some INVESTMENT so-called banks into a hodge-podge of confusing messes > then selling those at ridiculous prices > ONLY to come back later and SHORT the crap out of the very things they sold.

OK, Countrywide sold a lot of poorly designed mortgages to a lot of poorly financed people, BUT no one put a gun to those people’s head. And when Lehman’s went under because of the shorts killing their investments and everyone started to get fired and schemes like Abacus >>>> well then everything became toxic.

Was all that Mozillo’s fault?? Actually if we did a fair and proper assessment of what HE and Countrywide did we just might find that they were suckers just like the rest of us. Look the real causes of this mess as I wrote about 5 years ago: the people who built the homes >>> sold those homes to people who could NOT afford them using contrived mortgages designed to fail >>> ONLY to short the very mortgages they were using to sell the houses they built in the first place.

Mozillo was far from an innocent bystander in this deal.He kept the pipeline greased by providing sweetheart loan terms to select senators like Christopher Dodd on the banking committee.They would like people to believe that that sup prime was the issue. It wasn’t. Prime or sub-prime when you lose your job you cant pay your bills. Pawn shops are a form of sub-prime. They are still around. When you’re playing like Lehman, Goldman etc were/are at 300 to 1 leverage don’t take much to bring that down.

i literally spit out my coffee reading that quote…and i wasnt even drinking any.

Hes got some nerve…he saw the crisis coming down the pipe and quickly divested and cashed out before the stock tumbled.

He knew he was making garbage loans, that werent to FHA/Freddie/Fannie standards and selling it to them to collect the fees. No income, no problem, well finance you 100% LTV, negative amortization ARM’s, because everyone KNOWS the value of homes never go down.

Countrywide’s among others kept pumping up the prices of homes by never really denying anyone credit, in addition to the US govt keeping the price of debt low and flowing.

However the Government made it easier thought multiple programs to default or refinance their loans to the benefit of the homeowner. There are times, just like it made sense to stay on unemployment than take a lower paying job, that the Govt intervention made it better to just walk away from their homes and let the bank take the loss.

Creating over-leveraged loans(like 300 to 1) backed by CDS or worthless underfunded insurance were/are the problem; potentially leaving the bank/s that created that CDS facing criminal charges should any CDS holder try to collect on that credit default insurance.That is why they wont reduce principal to all the PIGS countries. All those loans are also backed by worthless CDS. $23 trillion of CDS out there today.

You can thank Congress at the behest of then treasury secretary and former CITI CEO Rubin for convincing Congress to abolish the Glass Steagal act in 1999, passed following the 1929 bank debacle precisely to avoid a repeat of bank speculation which led to 1929 collapse

Ambac (which started this mess) was NOT a bank. Bear Stearns was NOT a bank. AIG was NOT a bank. Lehman’s was NOT a bank. Yes WAMU was a bank, but NOT a so-called big bank.

We have BLAMED and prosecuted and chastised EVERYOE but the handful of short hedge funds that actually caused this entire mess. Halah will testify that at least I have NOT changed my story over the past 5 years.

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